Weekly Intelligence Notes (WINs) are commentaries on Intelligence and related national security matters, based on open media sources, selected, interpreted, edited and produced by AFIO for non-profit educational uses by AFIO members and WIN subscribers.

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THE DUELFER REPORT - The fruit of 16 months of investigation by the Iraq Survey Group, headed by Charles Duelfer, special advisor to the DCI for Strategy Regarding Iraqi Weapons of Mass Destruction, the redacted report was posted on the CIA Web site late on 6 October. The Duelfer report stands to the U.S. intervention in Saddam Husayn’s Iraq as the 9/11 Commission report does to the Intelligence Community: they are essential reading for those seriously concerned with their respective subjects. Some of the many salient points in the Duelfer report are given below.

American failure to anticipate the Iraqi insurgency. This was just one of several major misreadings of Saddam Husayn and his regime, according to the report.

"Saddam believed that the Iraqi people would not stand to be occupied or conquered by the United States and would resist - leading to an insurgency,'' the report says. "Saddam said he expected the war to evolve from traditional warfare to insurgency.''

This agrees with U.S. intel reports that the broad outlines of the guerrilla campaign now underway were laid down by Iraqi intelligence before the war.

·Saddam and WMD. As late as 16 March 2003, the report says, three days before the war began, U.S.intel services continued to receive reports from foreign services and other sources regarded as credible that Saddam would use chemical weapons against American troops in the event of war. In reality, Iraqis who served the regime told Duelfer's investigators, in December 2002, Saddam conceded he had no such weapons. Nevertheless, the report found, Saddam engaged in strategic deception intended to suggest that he retained WMD and maintained weapons programs that put him in material breach of U.N. resolutions.

·U.N. Sanctions. Saddam expected to resume WMD production following the lifting, which he expected. of U.N. sanctions. These barred him from importing any military material or dual use goods that could be used for military purposes. By 2002-2001, the Saddam regime was losing its international stigma and the sanctions regime was heading for collapse.

Starting in 1999, having found governments and private companies willing to ignore the UN sanctions, Saddam purchased components of long-range missiles, spare parts for tanks and night-vision equipment. Saddam worked with the governments of Syria, Belarus, Yemen, North Korea, the former Yugoslavia and possibly Russia, as well as with private companies in Europe, Asia and the Middle East.

"Prohibited goods and weapons were being shipped into Iraq with virtually no problem," the report says. "Indeed, Iraq was designing missile systems with the assumption that sanctioned material would be readily available." Saddam told senior armed forces officers in January 2000, "We have said with certainty that the embargo will not be lifted by a Security Council resolution, but will corrode by itself."

Vouchers for Oil. Saddam set up a vast, international bribery scheme implicating governments, political parties, United Nations officials, companies and individuals from at least 44 nations who received vouchers to buy oil, both legally and otherwise. The most politically sensitive names on the list are French, Russian, Chinese, Canadian and Japanese.

Saddam particularly targeted three of the five permanent members of the U.N. Security Council, France, Russia and China, with the intent of having them help lift sanctions that hindered his acquiring all kinds of goods and material outside a narrow range supplying humanitarian needs.

France has reacted furiously to the naming of Charles Pasqua, a former Defense and Interior minister and close collaborator of President Chirac, and other high officials as recipients of oil allocations. The abrupt disclosure of the names has seriously strained Franco-American relations, the New York Times reported on 9 October.

An Iraqi intelligence report, discovered by the ISG, said that a French politician assured Saddam in a letter that France would use its U.N. Security Council veto against any U.S. to get any UN authorization for an attack on Iraq. France subsequently threatened to do just that. Russia and China also worked hard to help Saddam evade and lift the sanctions.

Senior Russian officials, political leaders and companies helped Saddam amass $11 billion between 1996 and 2003 and were paid an estimated $130 million, in violation of the UN sanctions, the Moscow Times reported on 8 October, citing the Duelfer report.

Chevron, Mobil, Texaco and Bay Oil and three individuals received vouchers and 111 million barrels of oil between them from 1996 to 2003. They were able to make money by selling the oil or the right to trade it.

The individuals were Oscar S. Wyatt Jr. of Houston, Samir Vincent of Annandale, Va., and Shakir al-Khafaji of West Bloomfield, Mich. Vincent and Khafaji are Iraqi by origin.

The companies and individuals did not do anything illegal if the U.N. had approved the oil allocation. Spokesmen for the oil companies said they had received subpoenas from a federal grand jury in New York, which is investigating oil transactions.

The names of American corporations and nationals who received vouchers were not included in the redacted report published on the CIA Website late on 6 October. Names of American individuals cannot be publicly disclosed under privacy laws, but the names were contained in unredacted copies of the report, a copy of which was shown to the Times, it said.

If Duelfer had had his way, U.S. companies and individuals would have been named in the redacted report, the Washington Post reported on 8 October. Duelfer was prevented from naming the Americans by CIA lawyers.

In a separate CIA report, the New York Times reported on 6 October, the agency found that it was not clear whether Saddam's regime harbored members of an Islamist terrorist group led by Abu Musab al-Zarqawi. The assertion Zarqawi was sheltered by Iraq was a key point in the Bush administration argument that Saddam had connections to al-Qa'ida. The new assessment, revising pre-war intelligence, was based on information gathered after the invasion of Iraq. (DKR)

JOINT SHI'I-SUNNI HIGH COMMAND SEEN AS EMERGING - Western intelligence sources report that a new high command is emerging made up of Hizballah, Hamas and the Islamic Jihad in the occupied Palestinian territories, all Sunni Muslim groups, and the Shi'i Islamic Republic of Iran, according to a veteran British specialist in the Middle East, writing in the Daily Star

(Beirut) on 4 October.

"The striking features of this alliance are that it bridges the Sunni-Shiite divide and unites Arab nationalists and Islamists in a common cause. As a member of one of these groups put it to me: 'There is today no difference between resistance and jihad,' “ Patrick Seale wrote.

Seale was born in Damascus to a missionary family from Northern Ireland and was for many years the Middle East correspondent of The Observer (London). He succeeded the notorious Kim Philby in that post. Although Seale is sympathetic to the Arabs and highly critical of U.S. policy, he is regarded as highly knowledgeable about the region and well informed.

Iranian activists opposed to the mullahs' regime in Iran have also told WINs that Sunni and Shi'i militant bodies are working together. This has been the case in Iraq for sometime, although there are also some Sunni elements there extremely hostile to the Shia.

The significance of Seale’s report lies in not only the closer alliance of anti-Israeli forces but also the implied deepening of Iranian involvement in the Levant. Most likely this is being carried out by elements of the Quds forces of the Islamic Revolutionary Guard Corps who have also been reported to be active in Shi’i areas of Iraq. (DKR)

CONGRESS SEEN AS PREFERRING PORK OVER CLEANING HOUSE - The way Congress has dealt with IC reform, as recommended by the 9/11 Commission, has been an egregious example of congressional politics as usual, the columnist David Ignatius charged in the Washington Post on 8 October.

In an articled titled, 'Hypocrisy On Spy Reform,' Ignatius the legislators have embraced the call for an NID and National Counterterrorism Center while ignoring or gutting the commission's proposal for similar reforms in Congressional intel oversight.

"Of all our recommendations, strengthening congressional oversight may be among the most difficult and important," the commissioners stressed in their final report. The commission urged that Congress give its intelligence committees control over authorizations and appropriations, thus endowing the committees with the muscle to provide real oversight.

But a Senate bill scuttled these reforms because they would have threatened the turf of powerful legislators, Ignatius wrote. "To be blunt," he said, "the senators put their own perks and prerogatives ahead of the nation's security."

The House version of is likely to be even worse, according to Ignatius. Congressmen have ignored calls for internal reform and the Republican leadership has loaded the bill with controversial proposals, apparently in the hope that Democrats will have to vote against it, giving Republicans an easy script for political attack ads, he alleges.

By focusing on appropriations power, the 9/11 Commission challenged one of Congress's most sacred cows. Longtime Capitol Hill observers know the appropriations committees are where Congress's real clout resides and what sustain its culture of logrolling and mutual back-scratching, he wrote. The IC knows it can safely ignore pressure from the intelligence committees. DCIs know they can ignore the intel committees as long as they keep stroking the appropriators.

The system has worked in such a way that Sen. Robert Byrd, who Ignatius calls a master of the appropriations process, is said to have agreed to support creation of a new Measurement and Signatures Intelligence Center -- but only if it were located in his state, West Virginia; the proposal eventually died. Sen. Richard Shelby, a well-connected former chairman of the intelligence committee, managed to steer many projects to a Missile and Space Intelligence Center in Huntsville, Ala., that is now named after him. An underused Air Force supercomputer center in Maui was pushed by Hawaii's Sen. Daniel Inouye, another wizard of the appropriations process.

The Pentagon has managed over the years to maintain control over about 80 percent of the intelligence budget that goes to NSA and military units. Sen. John Warner, chairman of the Senate Armed Services Committee, won passage of an amendment this week that ensures the SecDef, not the new NID, will nominate the heads of the NSA and the other agencies.

"A telling example of how the current system misfires came not long ago, when the Senate intelligence committee decided after long study to cancel an expensive satellite reconnaissance system," Ignatius wrote in conclusion. "The Appropriations Committee promptly restored funding. That's the sort of monkey business that's guaranteed to continue, with a Congress that's prepared to clean every house but its own." (DKR)

FBI SHIFT TO TERRORISM, AWAY FROM ORGANIZED CRIME AND DRUGS - Since 9/11, the FBI has reprioritized its mission and shifted substantial resources from investigating traditional crimes to matters related to terrorism, according to IG Glenn A. Fine, as reported in the Washington Times on 5 October.

Over the past four years, the FBI allocated more than 560 additional field agent positions to terrorism-related matters. There have also been significant increases in case openings for investigations involving al-Qa'ida leader Usama bin Ladin and foreign counterintelligence cases.

Personnel reassigned to terrorism-related matters were mostly drawn from the bureau's organized crime and drug program.

The FBI now classifies its cases and its use of personnel using a three-tier system, consisting of 12 programs that reflect general investigative and administrative areas, including domestic terrorism, white-collar crime, civil rights, organized crime and drugs; 51 subprograms that fall within 10 of these programs; and 759 other investigative classifications.

The largest reduction in resources and manpower was in drug-related matters involving Mexican organizations, primarily affecting field offices along or near the southwest border of the United States, Fine said.

The released report was a redacted version of a 486-page report given to the FBI, DoJ and congressional oversight committees. (DKR)

CALL TO IMPROVE TRACKING TERRORIST FINANCING - Western intel services that oversee financial channels used by terrorist do not inform financial regulators whether their efforts to check such terrorist financing is effective or not, according to Arthur Docters van Leeuwen, former head of the Netherlands secret service, writing in the Financial Times of 7 October.

Now chairman of both the Netherlands Authority for Financial Markets and the Committee of European Securities Regulators, he acknowledges the need for intel services to protect sources. But the lack of feedback, he says, puts the regulators in a worse position than the man hunting for the proverbial needle in a haystack. "We are not even told whether we should be looking for a needle or a pin," he wrote.

The most feasible and effective strategy for fighting terrorist financing consists of three steps, he said. The first is to put obstacles in the way of the terrorists; the second is to pursue them; and the third is to infiltrate their networks.

Putting barriers in the way of terrorists means pulling down the barriers between regulatory and other authorities. He points approvingly to the FEC, a Dutch network of agencies involved in improving the integrity of the financial sector. Within FEC, intelligence and security services, police, tax services, the justice department and the financial regulators exchange information and conduct joint investigations in specific areas.

Freezing terrorists' assets is part of pursuing them. But this takes time and requires proof that a person or organization is directly linked to terrorism. Requests to financial institutions for information about people on watch lists are only useful when backed up by specific information - and that is often not the case. Another problem arises from rules obliging financial institutions to report suspicious transactions. The result is a volume of information so great that it threatens the effectiveness of the whole system.

Infiltration of terrorists’ networks is a task for intel services and needs more input by agencies that have succeeded in infiltration.

Docters van Leeuwen proposes the European intel services appoint an intermediary who would have their confidence and possess knowledge of the financial world. The go-between would be able to suggest to regulators how they might direct their efforts, suggestions that should be accepted without asking questions about the reasons for the advice.

"We need to be more creative in the joint effort to end the financing of terrorism," he concludes. "But this can be achieved only if the agencies receive more reliable information about the efficiency and effectiveness of their methods." (DKR)

DHS IG SAYS WATCH LIST LACKS LEADERSHIP - Because of a lack of internal resources and infrastructure, DHS has failed to come up with leadership to oversee consolidation of multiple terrorist watch lists, according to the DHS IG.

Purdy, who was Yoran's deputy, was appointed to the interim post as Congress considered whether to give the cyber-security boss greater powers to fight hackers, viruses and other online threats.

The appointment was announced as IT industry representatives said naming an interim cyber chief was no solution problems of how the cyber-security is dealt with by the Federal government. industry sources said Wednesday.

Extremism: Allah, the Army and America’s War on Terror (M.E. Sharpe/East Gate, 320pp. $25.95)

Abbas, a Harvard fellow and former officer in President Pervez Musharraf’s anti-corruption police force, provides a detailed analysis of Pakistan’s complicated history from its birth in 1947 down to the present when an impoverished, graft-riddled government seems to teeter on the edge of collapsing into the abyss of anti-Western Islamofascism.

Both President Zia Ul-Haq, who promoted the Islamization of the state and army, the United States, by its support for Islamist jihadis fighting the Russian occupation next door in Afghanistan, helped lay down the road to the country’s present perilous condition.

One of the many valuable things in Abbas’ work is his description of the most dangerous jihadi movements in Pakistan. Another is his account of the Kashmir dispute, the South Asian equivalent, in its long duration and intractability, of the Israeli-Palestinian conflict in the Levant. (DKR)

HISTORY OF U.S. COUNTERINTELLIGENCE NOW ON LINE - The encyclopedic four-volume “A Counterintelligence Reader,” edited by Frank J. Rafalko, and prepared for the now-defunct National Counterintelligence Center, begins with the American Revolution and continues down to current challenges from China, Russia and elsewhere.

As well as covering well-known cases, such as the Venona intercepts, the study gives detailed accounts of less well known topics, such as counterintel in the Civil War as well as accounts of little publicized individual espionage cases.

Enemy: A History of America’s Disastrous Relationship with France (Doubleday, 304 pp. $24.95)

National Review reporter Miller and Harvard lecturer Molesky have written a diatribe in the guise of a historical study.

American school children, being taught about the Revolution, used to learn, and it is to be hoped still do, that the Marquis de Lafayette and especially the French navy played valuable roles in the struggle that culminated with the British surrender at Yorktown. M & M recount the massacre of British settlers at Deerfield, Massachusetts, by French and Indians in 1704, but ignore the vital assistance the French provided to the American revolutionaries.

French opposition to the U.S. invasion of Iraq is the immediate cause of M&M’s ire, but underlying that is the assumption that U.S. policy is always in the right and that the French, when they oppose it, are always in the wrong. That two states, at peace with one another since the Revolution and allies in the great struggles of the 20th century, may also have substantive conflicts of interest and act to protect their interests seems beyond M&M’s ken.

Our Oldest Enemy is a meretricious piece of faux-history. Doubtless, it will find readers among those of primitive mentality, eager to fuel their untutored emotions. Those who take history and international relations seriously may also value the book – as a demonstration of how intellectual irresponsibility may be employed for fun and profit. (DKR)

Issues

CALL FOR NEW NID TO FLATTEN BLOAT - Congress and the president must find some way to flatten the bloated hierarchies the new National Intelligence Directorate will oversee and streamline the presidential appointments process that will fill its top jobs, wrote Paul C. Light in the Washington Post on 5 October.

Light, a professor of public service at New York University and a senior fellow at the Brookings Institution, finds the IC the latest symbol of the federal government's hopelessly dysfunctional hierarchy, the result of swollen numbers of senior title-holders created since 1961.

Since 9/11, the FBI has created a new layer of executive assistant directors and increased by half the number of senior titles. The CIA created a new deputy director for community management so that there is now a director, two deputy directors, two executive directors and at least seven other officials with the title of director. In addition to this bureaucratic bloat, the way appointments are made practically ensures that the NID will have to wait months, if not years, to fill its top jobs, Light believes.

Two months before 9/11, only a third of 166 jobs subject to Senate confirmation and through which the war on terrorism was to be led had been filled. Two months later, scarcely half of the posts had been filled. "The secretaries and deputy secretaries were in place, but the rest of the hierarchy was pockmarked with vacancies," writes Light. "The agencies were not so much headless as neckless."

By the time President Bush's Cabinet and sub-Cabinet were finally in place, roughly 81/2 months had passed before the average post was filled.

Nominees have to list every foreign trip they have taken over the past 15 years, give the birth dates and birthplaces of their parents and in-laws, and provide the name and phone number of a classmate from every school they attended since turning 18, including high school.

The quickest way to deal with these obstacles it to endow the next president with authority to come up with plans on the same fast track applied to permanent normal trade status or the up-or-down rules that applied in the past to closing military bases. The authority could be restricted to administrative flattening, or also include a more radical IC reorganization.

For its part, Congress could cut two to three months off the appointment process by passing the Presidential Appointments Improvement Act, introduced by Sen. George V. Voinovich, that would streamline disclosure forms and make them available online. Congress could also urge the president to reduce the number of appointees.

Despite a promise to bring MBA thinking to government, the Bush administration allowed more thickening of the federal hierarchy than Bill Clinton and had the slowest transition in modern history.

"The weeds may not grow fast in Texas," Light concludes, "but they certainly do in Washington, especially when the president doesn't pay attention." (DKR)

IRAQ MUST BE STABILIZED, SAYS GERMAN INTEL CHIEF - The breakdown of Iraq would destabilize the Middle East, boost Islamic terrorism worldwide and might allow terrorists to put scientists involved in Saddam Husayn's weapons programs to work for them, according to August Hanning, head of Germany's Bundesnachrichtendienstintel service.

The BND chief, AP reported on 7 October, warned that all countries now have a stake in Iraq's future because Islamic radicalism posed a global threat. "That is why all of us have a common interest, whether we take part in the U.S.-led coalition in Iraq or not," he said. "This country must be stabilized.”

Hanning said violence in Iraq risks plunging the country into the chaos of a disintegrating failed state, resembling terrorist havens like 9/11 Afghanistan. Extending security across Iraq, with its diverse ethnic and religious groups, is "a tough task that will still claim many victims," he said.

The outlook is dark if security is not established, Hanning said in a speech at a terrorism conference. "In this case a trend like in Afghanistan or Lebanon in the past is a very likely scenario."

Hanning sees Western nations as losing the battle for the hearts and minds of young, disaffected Arabs. "I detect a still growing, generally anti-Western mood in the Muslim countries," he said. (DKR)

[IMPORTANT: AFIO does not "vet" or endorse these
inquiries or offers. Reasonable-sounding inquiries and career offerings are
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Careers

Senior Risk Consultant -
New YorkThe Pacific Firm, a retained executive search firm, seeks a Senior Risk
Consultant for one of its clients. The client is a global consultancy firm
with a commitment to sustainable development, which prides itself on its
contribution to the built environment. They are involved, both locally and
internationally, in some of the world's most prestigious engineering
projects. They hire the best and brightest people and provide an opportunity
for growth commensurate with one's investment of skill, energy and desire to
contribute and succeed. This position is based in New York, within the
Deliberate & Extreme Events Consulting Business. The successful candidate
will grow and lead the deliberate and extreme events consulting business
area for Risk Consulting in the New York office. Responsibilities include
managing the existing threat and risk assessment business with our NY
clients, helping to grow the business in NY and in other locations,
developing the business plan, budgets and operating plans for the business,
supervising staff within the group, developing and managing projects in the
business area, and leading/undertaking threat and vulnerability analyses and
quantitative risk assessments. They seek an experienced Engineer with
a minimum of 15 years experience, ideally 5 to 10 years of which should be
in US law enforcement or military focusing on counter-terrorism threat and
vulnerability issues and/or protective design. Candidate should also have
supervisory experience and possess US top-secret security clearance. xCIA,
NSA or FBI personnel encouraged to apply. They seek a team leader who can
work well individually and within a group. The candidate will be a primary
client contact and relationship manager. Engineering background, ideally
structural or civil would be ideal. Interested and qualified individuals
please email resumes to: Debbie Gale, The Pacific Firm
debbie@pacfirm.com p
262.524.8200, f 262.521.2747

Notes

Spy Theme Park Set to Open Its Doors in 2007 - Forget your typical amusement park full of rollercoasters and arcade games. “Spyland” promises to pull tourists deep into the shadowy world of espionage, where individuals will participate in a simulated safecracking operation, bomb disarmament, and even a high-speed gondola ride in an effort to save the world from destruction. The brainchild of a former French intelligence officer who publicly goes under his nom de guerre, “Xavier,” this soon-to-be hit based near Lyons, France will be open for business in spring 2007.

British WWII Fake A U.S. Best-Seller - The best selling wartime diary of a 12-year-old Dutch boy who survived the German invasion of Rotterdam before escaping to America was an elaborate fake by the British secret services designed to draw the United States into the war, according to a new book, reported the British newspaper The Independent online 10 October.

Dirk van derHeide's story, My Sister and I, was a best seller in the United States in the summer of 1941. It told how Dirk, his mother killed in the Luftwaffe's destruction of Rotterdam and his father in the army, escapes with his little sister Keetje to England. In London they undergo the Blitz before sailing to America as refugees, their ship evading U-boat packs on the way.

In a new book, Witenss to War, by Prof. Richard Aldrich, an intel historian, argues that the diary was a fake and part of a campaign by the British Secret Services to bring the United States into World War II. The British publishers, Faber & Faber, knew the book was propaganda but were prevent by British intelligence from informing the U.S. publisher, Harcourt Brace, that such was the case (Lewis R., DKR).

USN V Aircraft - In the announcement of 7 - 10 October - Memphis, Tennessee - VQ Association Reunion (See WIN #36-04 dtd 4 October 2004), VQ1 was incorrectly identified as standing for Fleet Air Reconnaissance Squadron One. Andre K. points out that V is the U.S. Navy abbreviation for a heavier-than-air craft as distinguished from a Z craft that is lighter than air. The distinction dates back to when the Navy had lighter-than-air blimps. (DKR)

Coming Events

18 October - Alexandria, VA - CT-CI Academy - Terrorist Attacks and Survival -- An all-day conference at the Counterterrorism-Counterintelligence Academy. Illustrated by the use of case studies, this tactical-level scenario-based training examines in-depth a wide variety of terrorist attacks, assassinations, kidnappings and hijackings and the lessons learned. The course also provides the knowledge and skills necessary to identify possible/likely attack sites and scenarios, as well as the recognition of pre-incident/pre-attack indicators. Learn what to do and what not to do and survive. Taught by global security expert Dan Mulvenna who has trained hundreds of executives on these skills. For more information, please visit: http://cicentre.com/counterintelligenceacademy/Open_Course_OCT_NOV_DEC_04.htm

24 October - Washington, DC - International Spy Museum - Spy School Workshop: Disguise 101 -- Skip the plastic surgeon. Hang up the Halloween costume. Never mind the witness protection program. You'll learn how to transform your appearance and, yes, change your identity at this amazing session. Former CIA "Masters of Disguise," Tony and Jonna Mendez, will share their expertise by demonstrating the tricks of the trade, and how seemingly subtle changes in dress, gesture, posture, speech, and facial expressions can create dramatic results. Old will become young and male morph into female before your very eyes! Will you detect who in your midst is concealing their real identity? Create your own disguise and see if you can fool the experts! For more information, please visit: http://www.spymuseum.org/calendar

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